Ron Johnson's Rx for J.C. Penney

Over the course of its nearly century-long history, J.C. Penney has never been known for its showmanship. Even in its glory days, the $18 billion-in-revenues department store was best thought of as a somewhat stolid, middle of the road place. Its founder, James Cash Penney, was a preacher’s son who eschewed credit, loose morals, and too much price “trickery,” as he put it.

Those days are over. This morning, with the kind of fanfare best suited to the launch of a new iPhone or iPad, new CEO — and Apple (AAPL) retail store creator — Ron Johnson welcomed some 700 media elites, analysts and friends of the new JCP family to a cavernous pier on New York’s Hudson River. His goal: announce his strategy for reinventing the company, and even, he boldly states, the department store shopping experience itself. “When you do something new,” says Johnson, “you get one chance when people are going to listen.”

And so Johnson went for it. The show — and it was a show — reintroduced J.C. Penney as not only a razzle-dazzle retail company with a rock-star CEO, but also a store that will treat its customers “fair and square” by dropping the piles of promotions in favor of a much simpler price structure. Not coincidentally, the new brandmark of the company is a sharply outlined square, with the initials “jcp” in the upper left corner.

Johnson strolled the stage confidently, bringing to mind his mentor, Steve Jobs, as he announced JCP’s new, three-pronged price strategy: one “fair price,” which is the ticket price — but, he says, not the inflated ticket on most goods that consumers don’t take seriously; one monthly special of items you actually want to buy at the time (think bathing suits in June, not December) at about 30% off; and, one final “best” price of around 40% off, which happens on the first and third Fridays of every month. No more Columbus Day sales, no more coupons, no more spend X, get Y back promotions, no more Friday at 7 a.m — and no more 90% off piles. “People are disgusted with the lack of integrity on pricing,” Johnson says.

That lack of integrity, of course, is at the core of today’s department store shopping experience — a cacophony of signs, promises and discounts that make it nearly impossible to figure out whether or not you’re getting what you paid for. J.C. Penney (JCP) actually did 590 different promotional events last year — more than one every day — yet ended up with the lowest productivity per square foot of any of its competitors, at around $200. It spent over $1 billion on marketing, which is more than the much larger Target (TGT) where Johnson was an executive before Apple. He thinks it was mostly a waste. Much as he did at Apple, he wants to make J.C. Penney a place that people want to go because it is inviting, warm and fun, a destination in itself rather than a place you happen to by because everything’s on clearance.

It’s an admirable goal, but a tough one: not only must the brand be revitalized, but — unlike Apple — the company needs to dramatically improve the appeal of what it sells in its stores.

To that end, the company also introduced some of its new brand partners, including Nanette Lepore and Martha Stewart (despite a new lawsuit by Macy’s (M) trying to put the kibosh on the deal), as well as a new celebrity spokesperson, Ellen De Generes, who once worked in the Metairie, La., Penney’s. Johnson and Michael Francis, Penney’s president and the former chief marketing officer at Target, also declared that the format of the store itself will change from the typical department store layout to a “town square,” with some 80 to 100 boutiques within each.

In a nod to what JCP calls “the disease,” attendees at the New York presentation walked through a migraine-inducing barrage of loud noises and multicolored price tags before reaching, at long last, a clean white space with blue skies and moving clouds. In the eyes of the show’s maestros, the new J.C. Penney appears to represent something akin to retail heaven. Guests at the unveiling included fashion heavy hitters Cindy Crawford, Diane von Furstenberg, Calvin Klein, Mary Kate and Ashley Olsen, and Martha Stewart.

It’s a lot to take in. And certainly, if what J.C. Penney wants to become the kind of department store-cum-theater of old where, as Francis puts it, there’s a “show every day,” there’s a long way to go. Most of all, Johnson must re-train the consumer to trust a store when it says its prices are not totally arbitrary. That is a long, slow, costly task — one that will still be underway long after the white vinyl floors and blue skies are gone from Pier 57.

Already, expectations are extremely high. The company’s stock has jumped 16% since Johnson was announced as the new CEO back in June 2011 (he took over in November). Yet Johnson, who not only left millions on the table at Apple by coming to Penney but also invested $50 million of his own in warrants that he can’t cash in for six years, seems more energized than intimidated by the whole experience. He clearly relishes the challenge — and, frankly, is one of the few people in retail with both a big enough reputation and enough chutzpah that you can’t count him out. “People don’t get it,” he says. “We’re not talking about becoming America’s favorite department store. We want to be America’s favorite store, period.”

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